Section 106, Protective Covenants, and Sale of Historic Post Offices

Posted on: February 10th, 2015 by Special Contributor 1 Comment

By Steve Hutkins

In her introduction to the 2012 Forum Journal on Section 106, National Trust president Stephanie Meeks notes that Section 106 requires federal agencies to “stop, look and listen” before jeopardizing historic resources. This valuable tool has saved thousands of historic sites across the country. But it only works as long as all players—preservationists and federal agencies—clearly understand Section 106 and their role in the process. As we approach the 50-year mark of the enactment of the National Historic Preservation Act and Section 106, the Preservation Leadership Forum has enlisted the help of preservation practitioners to take a close look at how Section 106 has worked over the past five decades. Here Steve Hutkins, professor at New York University and editor of “Save the Post Office” website, talks about recent problems with the disposal of historic post offices and the use of covenants and Section 106 to protect these buildings.

The colonnade of the downtown Berkeley post office building. | Credit:  Daniel Parks via Flickr under Creative Commons

The colonnade of the downtown Berkeley post office. | Credit: Daniel Parks via Flickr under Creative Commons

About six years ago, the Postal Service embarked on a program to downsize its real estate portfolio, and among the properties earmarked for disposal were many historic post offices. About 50 historic post offices have been sold since 2009, and another 50 have been reviewed, marked, or listed for sale. This disposal program instigated a wave of Section 106 reviews, and by 2012 the federal preservation officer at the Postal Service was dealing with more than 70 Section 106 consultation processes.

Many communities and organizations have contested the disposal program, and four of the sales—in Venice, California; Stamford, Connecticut; Bronx, New York; and Berkeley, California—have been challenged in the courts. The sales have also been the subject of two very critical reports by the USPS Office of Inspector General and the Advisory Council on Historic Preservation.

One of the points of criticisms has been that the Postal Service is not doing a satisfactory job maintaining an inventory of its historic properties and identifying which of them might be nominated to the National Register of Historic Places, as required by Section 110 of the NHPA. The Postal Service does not even have an accurate list of active post offices on the National Register. In a 2011 report to the Advisory Council, the Postal Service indicated that 523 post offices are listed on the National Register, but a 2014 addendum to the same report said that 61 properties are on the National Register. There are probably at least 500 active post offices on the National Register, and perhaps 2,000 others are eligible.

Section 106 and Historic Post Offices

Section 106 states that transferring a property out of federal ownership without “adequate and legally enforceable restrictions” that will ensure “the long-term preservation of the property's historic significance” constitutes an adverse effect. In order to protect a property after it leaves federal hands, the Postal Service typically establishes a preservation covenant that identifies which features of the building are historic and sets forth what needs to be done to preserve them. Covenants are recorded as part of the deed, and they bind future owners to protect the historic character of the property.

Exterior of the Venice, California Post Office | Credit:  Michael Dorausch on Flickr via Creative Commons

Exterior of the Venice, California, Post Office | Credit: Michael Dorausch on Flickr via Creative Commons

In order to ensure that they are enforced, the covenant is a property right that is gifted to an agency or organization willing and able to accept it, such as the state historic preservation office (SHPO), a Certified Local Government (CLG), or a private preservation organization. Since the grantee is typically required to monitor the covenant in perpetuity, it can be difficult to find someone willing to take on what can be a costly burden.

The Postal Service has typically viewed the attachment of a preservation covenant as a method to avoid the “adverse effect” that would result from the sale of the property. However, if there are issues with the covenant and adverse effects would remain despite the covenant being executed, the Postal Service can execute a Memorandum of Agreement (MOA). The MOA offers a greater opportunity for consulting parties to determine the appropriate steps for avoiding, minimizing and mitigating adverse effects that result from the sale of the property. A covenant, for instance, can be a condition of an MOA, but the agreement may also contain other stipulations binding on USPS to assure the consequences of its move from a historic building are taken into account.

MOAs are also useful when the Postal Service seeks to sell a post office that contains New Deal-era murals and other art works, which it is prohibited from selling. In these cases the Postal Service can use the consultation process to determine the terms of a loan agreement for art to the new owner of the building. The MOA process can help set forth the owner’s responsibilities about preserving the art, providing continued access to the public, limiting access to photographers who might make commercial use of images, and so on.

Problems with MOAs and Protective Covenants

historic post office CoverAs the Postal Service has increased its disposal program over the past few years, these protective covenants and MOAs have come under scrutiny and become the source of considerable controversy.

One issue is how long the covenant or MOA remains in effect. In Santa Monica, California, for example, the Postal Service sold a New Deal-era post office to a film production company. In its report to Congress, Preserving Historic Post Offices, the ACHP noted that in December 2013 it had sent a letter to the Postal Service stating that the covenant was insufficient and jeopardized the long-term protection of the property’s historic significance because it included a clause that allowed the city, following public notice, to modify or cancel covenant restrictions.

Another recurring issue has been public access to the art within the building. As the New York Times noted in a 2013 article about the disposal controversy, when the Postal Service sold the historic post office in Venice, California, to film producer Joel Silver (to be turned into his studio offices), the USPS negotiated a loan agreement which stipulated that the mural—“Story of Venice,” by Edward Biberman—could be publicly viewed just six times a year and by appointment only. Because the USPS concluded that no adverse effect was caused by the sale of the building, the terms of the agreement were negotiated without review by consulting parties.

The typical boilerplate USPS offers regarding public access to murals is only a little better—just one day per month. That’s the case with the Loan Agreement for the Bronx General Post Office in New York, home to several outstanding murals by Ben Shahn. The good news is that the new owner plans to turn the building into a food market, so the public should be able to enjoy the murals.

The Berkeley, California, Post Office

Exterior of the Berkeley Post Office. | Credit: Wayne Hseih via Flickr and Creative Commons.

Exterior of the Berkeley Post Office. | Credit: Wayne Hseih via Flickr and Creative Commons.

Another recurring issue with the sales has been finding an appropriate agency or government entity to serve as the covenant holder. This problem has been particularly acute in California, where several historic post offices have been put on the market and the SHPO has been reluctant to take on the burden.

As it prepared to sell the historic post office in Berkeley this past October, the Postal Service was unable to find a covenant holder that it found satisfactory. Since the SHPO did not have the resources, the City of Berkeley offered to hold the covenant, but only if the Postal Service would commit to maintaining a post office within the building for 50 years—a condition the Postal Service found unacceptable. The National Trust also offered to take on the covenant, but, as is standard practice, it wanted to be paid a fee to cover the costs of monitoring and enforcing the agreement over a long period of time, which can be formidable.

The Postal Service would not agree to the conditions required by the City or the Trust. Instead, with the sale of the post office “in contract,” the Postal Service determined that it would serve as the covenant holder itself.

Reid Nelson, director of the ACHP Office of Federal Agency Programs, then wrote a letter to the Postal Service saying that such a covenant would not ensure the long-term preservation of the property because it gave the Postal Service “unfettered authority to approve adverse effects to the property (including demolition).” The ACHP also noted that the Postal Service “had neither demonstrated experience in holding preservation covenants nor an apparent interest in the long-term preservation of the property.”

The federal preservation officer of the Postal Service, Daniel B. Delahaye, responded with a letter expressing his disagreement with the ACHP’s opinion, reaffirming the Postal Service’s finding of “no adverse effect,” and closing the Section 106 process. The issue is now the basis of one of the counts in a lawsuit brought by the National Trust and the City of Berkeley against the Postal Service over the Berkeley sale.

It seemed at the time that the Berkeley case might be unique, but the Postal Service recently decided that it would also serve as the covenant holder for the Old Chelsea post office in Manhattan, where the Postal Service wants to sell the air rights over the building to a developer for an apartment building. As with Berkeley, the ACHP informed the Postal Service that such a covenant did not support a finding of no adverse effect.

A Programmatic Alternative

Exterior of the Stamford Post Office on Atlantic Avenue | Credit: Dennis Griggs/Tannery Hill

Exterior of the Stamford Post Office on Atlantic Avenue | Credit: Dennis Griggs/Tannery Hill

In order to avoid such problems, the ACHP and the National Trust have asked the Postal Service to work out a programmatic agreement that would cover the key aspects of the disposal program—initiating the 106 process, drafting the covenants, securing covenant holders, and reviewing consulting party requests from the public to participate in the preservation process. The National Trust has also offered to serve as the covenant holder for a number of covenants, providing the Postal Service pays a fee for the service.

Such a program agreement was also the recommendation of the USPS Office of Inspector General in its audit report, as well as URS, Inc., a private consulting firm hired by the Postal Service to do a report on historic post offices.

The Postal Service has rejected the idea. In a letter responding to the ACHP Report to Congress, Tom Samra, USPS vice president of facilities, wrote that given the current volume of disposals, the sales “do not warrant a programmatic approach.” Samra took issue with nearly all of the criticisms and recommendations in the ACHP report and defended the sales for the way they “revitalize communities and protect the historic properties from deterioration and loss.”

At this point, it appears that conflicts over the covenants and MOAs will continue, and the sale of historic post offices will remain a source of controversy.

Editor's Note: For more information about the National Trust for Historic Preservation's involvement with saving historic post office buildings visit www.savingplaces.org.

Want more? Read the full Section 106 series and the series on Section 110 of National Historic Preservation Act on this page.

Steve Hutkins is a literature professor at the Gallatin School of New York University, where he teaches courses on travel writing, the literature of the 1930s, and "a sense of place."  He founded Savethepostoffice.com in April 2011, when he became concerned about post office closings and the sale of New Deal post offices.

Legal, National Treasure

One Response

  1. Yuqi

    February 16, 2015

    Maybe it will be helpful to combine this type of covenant with some incentive programs such as federal/state historic preservation tax credit. Then, maybe buyer/ developer/ lender who gets the tax credit can be required to bear the burden of paying for the cost of guaranteeing the preservation covenant.